Thursday, December 29, 2011

Arabica
coffee, as traded in New York, is on track to fall some 8% in 2011, a
better performance than managed by most other soft commodities, but a
poor result compared with the rise of more than 75% in 2010.

Besides
the weaker global economic outlook, prices have been held back by a
bumper crop for an "off" year in Brazil, the top producer, where arabica
output has alternately higher and lower years.

But output in Colombia, the second-ranked arabica producer, has – again – disappointed, thanks to poor weather.

Brokers below give their forecasts for 2012.

Commerzbank

"Arabica
coffee… should in our opinion remain above 200 cents a pound in 2012 – a
high price level, historically speaking – even if the peaks of 300 US
cents a pound seen in 2011 are likely to be a thing of the past.

"High-quality arabica beans in particular could remain in short supply, due to the continuing precarious situation in Colombia.

"A
positive factor is that Brazil is poised for a high-yielding crop year
in the biennial cycle and Brazilian beans are now also approved for
delivery to the New York exchange.

"[But]
Brazil had to struggle with a drought between May and September, which
hampered the growth of the beans to the extent that no new record will
be possible in the next harvest which begins next May

"The
fact therefore remains that the global coffee market has been in
deficit for years, and at best the forthcoming 2012-13 season could end
with supply and demand roughly in balance."